Life Insurance can be termed as an agreement between the policy owner and the insurer, where the insurer

for a consideration agrees to pay a sum of money upon the occurrence of the insured individual's or individuals' death or other event, such as terminal illness, critical illness or maturity of the policy.

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Insurance in India can be traced back to the Vedas. For instance, yogakshema, the name of Life Insurance Corporation of India's corporate headquarters, is derived from the Rig Veda. Bombay Mutual Assurance Society, the first Indian life assurance society, was formed in 1870. Other companies like Oriental, Bharat and Empire of India were also set up in the 1870-90s.

It was during the swadeshi movement in the early 20th century that insurance witnessed a big boom in India with several more companies being set up. By the mid-1950s, there were around 170 insurance companies and 80 provident fund societies in the country's life insurance scene. However, in the absence of regulatory systems, scams and irregularities were prevalent in most of these companies. As a result, the government decided to nationalize the life assurance business in India. The Life Insurance Corporation of India was set up in 1956 to take over around 250 life insurance companies.

For years thereafter, insurance remained a monopoly of the public sector. The sector was finally opened up to private players in 2001. The Insurance Regulatory & Development Authority, an autonomous insurance regulator set up in 2000, has extensive powers to oversee the insurance business and regulate in a manner that will safeguard the interests of the insured.

Protection Liquidity Tax Relief Money when you need it

Sum assured is payable only in the event of death during the term. In case of survival, the contract comes to an end at the end of term. Term Life Insurance can be for period as long as 40 years and as short as 1 year. No refund of premium Non-participating policies Low premium as only death risk is covered.
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Increasing Term Insurance

Life insurance cover under
this plan goes on increasing periodically over the term in a predetermined rate. (Riders)

Decreasing Term Insurance

The sum assured decreases with the
term of the policy. Normally decreasing term assurance plan is taken out for mortgaged protection, under which outstanding loan amount decreases as time passes as also the sum assured.
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Convertible term assurance policy

Under this plan a policyholder is entitled to exchange the term policy for an endowment insurance or a whole life policy. Conversion can be done at any time during the term except last 2 years.

Level Term Life Insurance

The sum assured throughout the term of the policy does not change.

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Renewable Term Life Insurance

With

renewable term insurance, the insurance company automatically allows you to renew your coverage after the term of the policy is over (generally 5 to 20 years)

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Endowment insurance plans is an investment oriented plan which not only pays in the event of death but also in the event of survival at the end of the term. Is a contract underwritten by a life insurance company to pay a Fixed term plus Accumulated profits that are declared annually. Premium is higher Premium includes 2 elements -mortality element & investment element Minimum age at entry : 12years Maximum age at entry: 65years Maximum age at maturity : 75years
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Joint Life Endowment Plan:

Under

this plan, two lives can be insured under one contract. sum assured is payable at the end of the endowment term or death of either of the two.

The

Money Back Endowment Plan:

In

this plan, there is an additional advantage of receiving a certain amount of money at periodic intervals during the policy term.
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Double Endowment policy: if the assured dies during the endowment period, the basic sum assured is payable, and if he survives to the end of the term, double of the sum assured is paid. Pure Endowment policy : opposite of term policy.

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Marriage Endowment Plan:

This

plan has the specific condition that the sum assured is payable only after the expiry of the term even if death of the life assured takes place earlier.

Educational Endowment Plan:

These

plans are specially designed to meet educational expense of children at a future date. If the insured parent dies before the date of maturity the installment is paid in lump sum with immediate effect which helps to meet the educational expenses.

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Whole life plans are another type of endowment plan, which cover death for an indefinite period. When the policy holder dies, the face value of the policy, known as a death benefit, is paid to the person or persons named in the life insurance policy (the beneficiary or beneficiaries). It can be with or without profits. If you cancel the policy after a certain amount of time has passed, the insurance company will surrender the cash value to you.
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Ordinary Whole Life Plan: This is a continuous premium payment plan. The insured pays premium throughout his life. It provides dual facility of protection plus savings.
1.

Limited Payment Whole Life Plan: It provides the same benefit as above but premiums are paid for a limited period. Premiums are sufficiently higher to cover the risk.
2.

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Insurance coverage to group of people under one contract. Schemes are provided for employees, association societies ,weaker section of society etc.

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Since last few years insurance companies have started offering risk cover plans like limited payment whole life, and endowment assurance plan from the age of 12years and money back plan from age of 13 years(completed). New plans have been specifically designed for children where the risk of the child starts much earlier say 7 years.

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Policies on the lives of children are taken out by other elders. After some time when the child becomes major and is competent to contract, the child may assume the ownership of the policy. The policy is then said to vest in child.
The date on which this happens is called the testing date. The risk begins when the child attains 18 years of age. This is called the deferred date and the period between the deferred date and the date of commencement of policy is called the deferred period.

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It has emerged as one of the fastest growing insurance products. It is a combination of an investment fund( such as mutual fund) and an insurance policy. The premium amount is invested in the stock market and returns better income on the maturity period.
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Better for long-term investment option. ULIPs generally provide higher returns as large portion of the funds are invested in equities. There is also flexibility and the assured can choose levels and extent of cover needed.

There is also option of switching over from one fund to another if it does not seem to be profitable.
ULIPs can be classified as
Unit linked equities, bonds, real estate & money market instruments Equity linked only in equities Index linked equity, bonds or money market instruments.
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Life insurance claim can arise either:

On the maturity of the policy Maturity Claim On death of the policy holder Death Claim Survival up to specified period during the term Survival benefits

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In case of Endowment type of Policies, amount is payable at the end of the policy period. Discharge Form & Policy Document On receipt of these two documents post dated cheque is sent by post so as to reach the policyholder before the due date The gross amount consists of Basic sum assured and bonus if any.

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Same as maturity claims, sum assured becomes payable on expiry of full term but on survival of the insured. In policies like, money back plan for 15 years term, 1/4th of the sum assured becomes payable on the life assured on surviving 5 year, further 1/4th becomes payable after additional 5 years and rest balance at the end of 15 years.

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2 Types: Premature death claim within 3 years Other claim after 3 years

Intimation of death is to be given by a proper person in writing. 1. Original Policy Bond 2. Death Certificate 3. Proof of relationship with the deceased person In case of Accidental Death Postmortern Report, FIR Copy , Final Police Report is also required

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Suicide or attempted suicide or intentional self-inflicted injury Under influence of drugs or alcohol, psychotropic substance not prescribed by a Medical Professional. War, Civil War, Riots, Revolution or any war like operation. Criminal or unlawful act Service in the military or police Flying activity other than as a paying passenger. Racing vehicle.

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Tax benefit from Life Insurance Policies The Indian Income Tax Act, make buying insurance cheaper as well as an
efficient investment for long term savings.

On Premiums:
Section 80D of the Insurance Act is an effective way for the salaried person to reduce tax liability through life insurance policy. Investments in Life Insurance premium is subject to rebate. Premium: Paid by an individual in respect of: himself/herself, his/her spouse, and any of his/her children.

Premium amount paid should not exceed 20% of the sum assured.
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 Premiums paid for Health Related Riders: Some of the critical illness, hospitalization cash and other health related riders attached to a Life Insurance policy may also be eligible for rebate under section 80D of the Insurance Act. This deduction is available to both Individuals & HUF. Rs.15,000 is the maximum amount deductible during the year for an individual as well as a senior citizen. Condition for applicability of deduction is that the premium must be paid by cheque in the previous year out of the income chargeable to tax.
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Death Claims and Maturity Benefits: Life Insurance Policies are under an EEE (Exempt-Exempt-Exempt) regime i.e. that the Premiums Paid, Income earned by the Investments, and payment of Maturity proceeds or claim are all exempt E from tax under section 10(10)(D) of the Income Tax Act.

The only policies that are not eligible for exemption on payment on
maturity or claim are Single Premium Policies or Policies where the sum assured was less than 5 times the Premium paid.

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How Much Life Insurance Coverage Should Be Purchased?

The Rule of Thumb isCoverage should equal to 6 to 10 times annual income. The other Rule isCoverage to cover his family consumption need.

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Functions of an Actuary in Life Insurance Business

Main function of an actuary in life insurance is to do assessment and valuation of mortality risk. Due to medical advancement now the life span of an individual can be determined which reduce the uncertainty of death. Due to which medical selection by the insurer is necessary and desirable both on the grounds of actuarial fairness i.e. charging premiums to different lives on the basis of their different levels of risk and for financial viability of the insurance company.
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